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  • Article: The Ins and Outs of Pooled Direct EB-5 Investments. By e-Council

    The Ins and Outs of Pooled Direct EB-5 Investments

    by


    The more well-known avenues to secure a green card via an EB-5 investment include an individual investor either opening his/her own business or investing in a Regional Center project. Recently, another avenue called a “pooled” Direct Investment project has become popular in industries that create a significant number of direct jobs, such as multi-unit restaurants and supermarkets.

    The EB-5 program has three general requirements. The foreign applicant must (1) make a capital investment in the amount of $500,000 or $1,000,000[1]; (2) in a new commercial enterprise (NCE); (3) that creates at least 10 new, permanent, full-time jobs.

    eb5images

    The main difference between a Regional Center project and a pooled Direct Investment project is the job creation requirement. USCIS permits a Regional Center project to count both direct and indirect jobs, while a Direct Investment requires that each individual’s investment in the NCE result in the creation of at least 10 direct W-2 jobs (or preserved jobs in the case of a troubled business) by the NCE.[2]

    Although a Regional Center project affords the advantage of counting both direct and indirect jobs, a Direct Pooled Investment project provides certain benefits to the investors involved. It is generally more expeditious to invest in a Direct Investment project as investment need not wait for the creation of a new Regional Center or amendment to an existing Regional Center prior to their selected project and investment being eligible for approval. Additionally, since indirect jobs will not be involved, investors can avoid the additional expense of obtaining an economic impact report. Finally, Direct investors can negotiate a more active role in the NCE’s business, which may alleviate concerns over the recent news of investment scams involved in Regional Center projects.

    A Direct Pooled Investment project does not readily lend itself to all types of industries. For example, a project involving the construction of a retail building or hotel would be unlikely to create sufficient direct jobs to support the job creation requirements to support the capital sought from immigrant investors, as most jobs would be construction-related (indirect).

    Multi-unit restaurants and supermarkets, however, provide an ideal model for pooled Direct Investment. An excellent example is Lucky’s Market (http://www.luckysmarket.com), a supermarket chain that provides an extensive selection of farm fresh and locally grown produce along with top quality naturally raised meats, seafood, fresh daily prepared foods and comprehensive natural living and grocery departments. Lucky’s Market continues to grow and is currently represented in 11 states from Florida to Wyoming.[3] Each new store has been developed in a targeted employment area and is designed to create in excess of 10 full-time jobs per investor.[4]

    Direct Pooled Investment is an excellent option in industries that create a significant number of direct jobs. Before choosing an EB-5 investment option, however, one must carefully consider the type of EB-5 investment most appropriate for a foreign investor’s individual needs and diligently investigate the suitability of the project for EB-5 investment. Whether one chooses a Regional Center project or Direct Investment project, engaging an experienced team of EB-5 professionals to assist in the process such as those at www.ecouncilinc.com is essential to success.

     


     

    [1]The minimum qualifying investment either within a high-unemployment area or rural area in the United States is $500,000. A targeted employment area is an area that, at the time of investment, is a rural area or an area experiencing unemployment of at least 150 percent of the national average rate. A rural area is any area outside a metropolitan statistical area (as designated by the Office of Management and Budget) or outside the boundary of any city or town having a population of 20,000 or more according to the decennial census. (http://www.uscis.gov/working-united-states/permanent-workers/employment-based-immigration-fifth-preference-eb-5/about-eb-5-visa)

    [2]Troubled business means a business that has been in existence for at least two years, has incurred a net loss for accounting purposes during the twelve- or twenty-four month period prior to the priority date on the alien entrepreneur’s Form I-526, and the loss for such period is at least equal to twenty percent of the troubled business’s net worth prior to such loss. For purposes of determining whether or not the troubled business has been in existence for two years, successors in interest to the troubled business will be deemed to have been in existence for the same period of time as the business they succeeded. 8 C.F.R. § 204.6(e).

    [3] http://www.luckysmarketeb5.hk/USCIS-approval.html

    [4]Id.

    This post originally appeared on e-Council. Reprinted with permission.


    About The Author

    e-Council Inc.'s team of professionals specializes in creating custom-designed Business Plans and supporting documents to meet the needs of both clients and their counsel. What sets us apart is the fact that we are an attorney-driven business plan and ancillary services team, whose principal is an active AILA member and a sought-after speaker. We pride ourselves on the exceptional quality of our work product. We are experts in the field, and boast a stellar track record of success.


    The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.

    Comments 1 Comment
    1. Fraud Filled EB-5's Avatar
      Fraud Filled EB-5 -
      This EB-5 Program is a wide open ticket to FRAUD.


      Within the last couple months the SEC and FBI have raided EB-5 offices and frozen assets of numerous EB-5 companies.


      Lobsang Dargey and Path America EB-5 Regional Center was charged with using investor money to purchase a $2.5 Million home for himself, a luxury Bentley automobile and hundreds of thousands of investor dollars withdrawn by him at casinos. $123 MILLION in alleged fraudulent scheme!


      Lily Zhong and her company EB-5 Asset Manager LLC alledgedly used investor money to purchase a luxury yacht, multiple vehicles and other personal extravagances.


      Robert Yang, MD, of Redlands, Calif., and Claudia Kano of nearby Pomona are accused of misappropriating investor funds to pay for other unrelated projects.


      These are MULT-IMILLION DOLLAR FRAUDS and the USCIS is the organization charged with oversight, yet this government organization has stated publically that they lack the ability to oversee or have any enforcement authority over EB-5 Regional Centers.


      Somehow 56 or so of the Regional Centers (nearly 10%) have now been reported as being under SEC investigation.


      It seems that the "Bad Guys" heard clearly that there was a way to recruit investor money that had no oversight!


      They seem to have promised investors that the funds would be used for specific projects then they use the money as if it were their own piggy bank so that they can live lavish lifestyles.


      Then to make matters worse, some Chinese investors stand to also lose the home that they mortgaged to rais funds

      AND THEY WILL LIKELY LOSE THEIR OPPORTUNITY FOR A US VISA.
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